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Auto-failover with separate instance

I'm new to SAP HANA so forgive me if my question is obvious. I'm looking at the auto-failover and I may me missing something. Typically, a failover mechanism uses it local instance of the the database, in case the master system dies or gets corrupted. It appears the auto failover only uses the master database. Which means if it fails or gets corrupted, your failover is of no use. Can you explain to me how this would work as a failover?

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